This week I represented my clients, on offer night, for the purchase of a detached home in a prime Toronto neighbourhood. Little did I know that by the offer registration deadline we would be one of 15 – yes, 15 offers. With the lack of houses for sale, buyers, having settled into the new interest rates (we’ve had 8 hikes since last April/22), are ready to buy. So, what kind of market is it? It’s still a Seller’s Market – low inventory, high demand.
Offer dates with bidding contests and properties selling for more than the asking price have made a comeback. Back in October, buyers said ‘we’ll wait’ and stayed home. I’m witnessing a big change in the last few weeks.
I believe we’re going to see a different 2023 spring market, with buyers who are in the market for the first time, while others are moving up to larger houses or more highly-rated school districts.
There’s still not a lot of product – that’s what’s driving everything. Inventory remains very slim, which means resolute buyers must compete for the most coveted properties.
SOME STATISTICS
Sales in February rose 8.5% from January while new listings dropped 24.5% on a seasonally adjusted basis.
Sales in February tumbled 47.3% from February, 2022.
The average price in February came in at $1,095,617 in the GTA. That’s a 17.9-per-cent drop from the average price of $1,334,062 in the same month last year.
The sharpest decline, in February, from 2022 to 2023, affected the 905-area code semi-detached homes, with the average price falling 25.9 per cent.
Detached houses fell 19.9 per cent and condos 11.8 per cent in the GTA.
The market’s recent spate of activity has not yet enticed a lot of homeowners to list properties for sale. For example, in the last week and a half there were only seven listings in Leaside and 14 listings in nearby Davisville Village. In 24 hours, a home priced at $1,869,000 drew 3 offers and the house sold for $1,920,100.
What’s most surprising is that buyers are paying prices in line with those of this time last year (2022).
A semi-detached house in Davisville Village neighbourhood would fetch about $1.9-million in the first quarter of 2022. In November, comparable properties were trading hands at about $1.5-million.
Last week a semi-detached house with list price of $1.649-million and sold over for $1.9-million. That’s a 2022 price.
It’s not right across the board. Only the most desired home in coveted neighbourhoods are seeing buyers pay large sums above asking.
Many buyers have budgeted for the current level of interest rates and have started chasing the limited number of listings.
An esteemed colleague of mine listed a 1950s-era detached 4 bedroom house with an asking price of $1.849-million. The price was set deliberately low to attract attention, and an offer deadline was set. We knew it was worth over $2-million – it was just a question of how much.
In only 2 days, 51 showings had taken place, and one couple decided to make a so-called ‘bully (preemptive) offer well before the offer date. As soon as all interested agents were notified, 6 agents and their buyers also came to the table. He said that the most shocking thing of all was to get 7 bully offers up-front. And 3 of them were over $2.5-million. Even though Q1 in 2022 would have seen even a higher sale price, competition right now is keeping prices level.
However, not all properties are drawing interest: some listings are really overpriced so they become stale and sit on the market.
Could this change? Definitely, if there’s a surge in listings to meet the high demand of buyers. The difference now is that the buyers who have been sitting on the sidelines are coming to to the table.
I see that our market is in transition, once again. With interest rates holding this month, there’s a greater opportunity for buyers to show their commitment to buy which, hopefully, will encourage more sellers to list their homes for sale. And if not, bidding wars will continue and prices will rise. Things ‘could happen’ quickly. We shall see.
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